Capital Goods Spending, External Contractors Replace Employment Growth

With the advent of Obamacare’s full extent and ever stiffer financial regulations making themselves felt, independent businesses are restoring two significant steps to maintain their viability and maximize whatever profit can be protected from the present regulatory squeeze:

1) Part-time, temporary workers, already a growing methodology appearing on the post recessionary scene are being supplemented with external contractors to manage situations that don’t require payroll and benefit participation.

2) An acceleration of whatever technology can sustain business levels, and even growth, while displacing the need for full-time employment, whether on the shop floor or in the back office.

Our previous columns on the intensifying use of “robotics” indicate that the “age of the robot” is only in its infancy at this time. It will likely accelerate its intensity under the aegis of present business circumstances.

Although capital spending on the whole, including that for Defense and aircraft, remains generally subdued, that segment dedicated to production equipment and software has picked up substantially in the last three months.

This principal of unintended consequences is accelerating in reducing the use of full time personnel in positions being replaced by hundreds of thousands of independent companies. However, countering this trend is the greater competitiveness of America’s business and industry, which is in the early stages of “insourcing.” This is the homecoming of jobs in manufacturing and services that were lost in rapid outflow during the past 20 years.

However, the upward ratcheting of hostility toward the Administration that is perceived as universally hostile toward independent businesses in particular, is acting as a deterrent for expansion.

The general tone of the many business contacts with whom I stay in touch is one of watchful waiting, and an intense preservation of the status quo. Until and if the nation’s political leaders wake up to the fact that “wealth redistribution” is primarily cut out of the hide of “small business,” the 80% of potential U.S. employees who depend on such businesses for jobs, will find themselves harassed by the Obamacrats’ ongoing business constraints.
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